Nigeria is emerging as an alternative destination for global oil and gas investors seeking to diversify their portfolios amid geopolitical risks in the Gulf region, with foreign groups indicating willingness to mobilise $21 billion for the country’s petroleum sector.
The Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, disclosed this on Monday in Lagos at the opening of the 44th annual international conference of the Nigerian Association of Petroleum Explorationists (NAPE).
Lokpobiri said the commitments followed his recent engagements with investors in Abu Dhabi during the just-concluded ADIPEC conference, where groups expressed interest in deploying capital in Nigeria as tensions and disruptions around the Strait of Hormuz highlight the risks of concentrating investments in one region.
“I can assure you that we had one or two non-binding MOUs with groups. One group is willing to mobilise $15 billion to invest in Nigeria,” he said.
He added that another group had indicated a willingness to commit $6 billion, bringing the potential investment commitments to $21 billion.
Hormuz disruption drives diversification interest
Lokpobiri said investors were considering Nigeria as a way to spread their exposure across different geographical locations, particularly as disruptions around the Strait of Hormuz raise concerns about the vulnerability of energy investments and supply routes in the Gulf.
He said one investor group had pointed to the region’s greater spare production capacity but argued that companies with available capital should diversify their investments to protect revenue streams against disruptions in any single location.
“Some of them are willing to come to Nigeria and invest. So, if there is any disruption in one location, the investment in Nigeria will continue to sustain your cash flow,” the minister said.
The Strait of Hormuz is a critical route for global energy trade, making instability around the waterway a concern for oil and gas producers, investors and consumers.
The minister’s disclosure comes as Nigeria seeks to attract more capital into its petroleum industry, particularly for exploration and production, amid funding constraints affecting energy projects across the continent.
Government seeks to connect investors with local firms
Lokpobiri said the government was now linking the foreign investor groups with Nigerian companies to discuss commercial arrangements and identify potential investment opportunities.
The proposed investments are not yet finalised, as the minister described the agreements as non-binding memoranda of understanding. Their eventual deployment will therefore depend on discussions between the foreign groups and prospective local partners.
He said the government was working to turn the expressions of interest into investments at a time when Western lenders are restricting financing for projects in Africa’s oil and gas industry.
The minister made the disclosure at the NAPE conference, which is themed “Unlocking More Barrels, Driving Reserve Growth through Exploration, Local Capabilities and Adaptive Technologies.”
The conference is focused on increasing Nigeria’s reserves and production through exploration, domestic expertise and the adoption of new technologies.
Source: businessfront.com